Insider Trading

Information is material if a reasonable investor would consider it important in deciding whether to buy or sell, typically, information about earnings, mergers, acquisitions, or regulatory approvals. Information is nonpublic if it has not been disseminated through channels making it broadly available. Both the materiality and publicity of information at the time of the trade are often hotly contested.

Yes. Under the misappropriation theory, a person violates securities laws by trading on information misappropriated in breach of a duty of trust owed to the source, including a family member. But the tipper must have received a personal benefit in exchange for the tip, and the tippee must have known or should have known of the breach. The 'personal benefit' requirement has been extensively litigated.

It depends on the specific information discussed, whether it was material, and whether your trading occurred before that information was publicly disclosed. Not every piece of information discussed at a management meeting is 'material nonpublic information'. Information is material only if a reasonable investor would consider it important in making a buy or sell decision, typically information about upcoming earnings, mergers, acquisitions, or regulatory approvals. If what was discussed was consistent with publicly available guidance, or was sufficiently uncertain to not move a reasonable investor, it may not be material. The timing of the trade relative to the meeting and any subsequent public disclosure, the size of the trade relative to your normal investment pattern, and whether you had pre-established a trading plan before the meeting under SEC Rule 10b5-1 are all factors the SEC and DOJ examine. If the SEC or DOJ contacts you about a trade in this context, retain experienced securities enforcement defense counsel immediately.